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Article: A Note on Risky Targets and Effort
Title | A Note on Risky Targets and Effort |
---|---|
Authors | |
Keywords | Effort Monotone comparative statics Risk apportionment Risky targets Stochastic dominance |
Issue Date | 2017 |
Publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ime |
Citation | Insurance: Mathematics and Economics, 2017, v. 73, p. 27-30 How to Cite? |
Abstract | This note examines the effort choice problem of a decision maker (DM) who has to meet a target. The more the DM spends on effort, the more likely the target is reached. Besides the risk of missing the target despite his effort, the DM faces additional uncertainty in that both the target and the status quo are subject to exogenous shocks that are beyond the DM's control. We consider two cases: the additive case in which the DM's effort affects solely the likelihood of achieving the target, and the multiplicative case in which the DM's effort also has direct effect on the target and the status quo. Using the theory of monotone comparative statics and risk apportionment, we derive sufficient conditions under which the DM spends more on effort when the target experiences an improvement in risk via higher-order stochastic dominance. |
Persistent Identifier | http://hdl.handle.net/10722/238752 |
ISSN | 2023 Impact Factor: 1.9 2023 SCImago Journal Rankings: 1.113 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Wong, KP | - |
dc.date.accessioned | 2017-02-20T01:25:38Z | - |
dc.date.available | 2017-02-20T01:25:38Z | - |
dc.date.issued | 2017 | - |
dc.identifier.citation | Insurance: Mathematics and Economics, 2017, v. 73, p. 27-30 | - |
dc.identifier.issn | 0167-6687 | - |
dc.identifier.uri | http://hdl.handle.net/10722/238752 | - |
dc.description.abstract | This note examines the effort choice problem of a decision maker (DM) who has to meet a target. The more the DM spends on effort, the more likely the target is reached. Besides the risk of missing the target despite his effort, the DM faces additional uncertainty in that both the target and the status quo are subject to exogenous shocks that are beyond the DM's control. We consider two cases: the additive case in which the DM's effort affects solely the likelihood of achieving the target, and the multiplicative case in which the DM's effort also has direct effect on the target and the status quo. Using the theory of monotone comparative statics and risk apportionment, we derive sufficient conditions under which the DM spends more on effort when the target experiences an improvement in risk via higher-order stochastic dominance. | - |
dc.language | eng | - |
dc.publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ime | - |
dc.relation.ispartof | Insurance: Mathematics and Economics | - |
dc.rights | This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. | - |
dc.subject | Effort | - |
dc.subject | Monotone comparative statics | - |
dc.subject | Risk apportionment | - |
dc.subject | Risky targets | - |
dc.subject | Stochastic dominance | - |
dc.title | A Note on Risky Targets and Effort | - |
dc.type | Article | - |
dc.identifier.email | Wong, KP: kpwong@econ.hku.hk | - |
dc.identifier.authority | Wong, KP=rp01112 | - |
dc.description.nature | postprint | - |
dc.identifier.doi | 10.1016/j.insmatheco.2017.01.001 | - |
dc.identifier.scopus | eid_2-s2.0-85009465767 | - |
dc.identifier.hkuros | 271125 | - |
dc.identifier.volume | 73 | - |
dc.identifier.spage | 27 | - |
dc.identifier.epage | 30 | - |
dc.identifier.isi | WOS:000399627200003 | - |
dc.publisher.place | Netherlands | - |
dc.identifier.issnl | 0167-6687 | - |